truphao

Again, thank you all. My thinking in terms of "scheduled" appears to be flawed and I appreciate the feedback tremendously. Back to collecting the job descriptions route if this is what prospect wants to do....Regarding the details why ABPT passes - this is a combo CB/PS one owner/20 NHCEs situation and there are few younger lower-paid salaried employees who will carry the ABPT.

Thank you all. I have reservations for same reasons as pointed out by the BL neighbors. One thing though has appeared to escape through the discussion. I am not trying to define the excluded class as "who work less than 2080 hours" but rather as "who are scheduled to work less than 2080 hours". To me it feels like somewhat objective criteria equivalent to a job class carveout. Probably does not change the answer though but I wanted to highlight.

The client employees few salaried employees and a bunch of hourly-paid employees. Many hourly employees are scheduled to work 1200 -1400 hours per year. Is it a "reasonable classification" to define the "hourly employees who are scheduled to work less than 2,080 hours per annum" as an "Ineligible Class"? I do not need them for testing as my plan would pass the ABPT with very comfortable margin. What are the issues with my thinking? Let's assume there won't be any employees who are scheduled to work part-time but later show up with a gazillion of hours.

yes

what about having both sole-prop and S crop to adopt the plan via joinder agreement? This should have been done before December 31 I guess but is there a room to make it work given https://www.irs.gov/pub/irs-drop/n-23-43.pdf.? I have not read it through in details yet. Just thinking aloud....

just a thought since I have not had a chance to deal with that in practice. If the original DB plan existed for 5 years, it might be possible to freeze the participation and not to allow this new hire in based on Secure Act (1.0 it is). I am sure there are a lot of issues to think through but it might work.

Thank you C.B. Zeller. I thought (and it might be the imagination) that if the 403(b) is structured as a church plan, there is an exception to exception?

I apologize in advance if the question is not formulated clear enough. I am trying to establish the framework to analyze the coordination of multiple employers, so the high level summary and IRC sites/links will be appreciated as well as reference to educational materials not in violation of proprietary information policies. Let's assume we have one person who works for an organization sponsoring 403(b) plan making in excess of $330,000 (just to avoid the math) as a W-2 employee. The person is under of 50. The same person also owns a single member LLC taxed as a sole-proprietorship that sponsors a "solo 401(k)" plan. Let's assume there is no CB/DB plan in a picture for time being. Scenario 1 - The organization is a non-profit hospital. Then the 403(b) plan is deemed to be controlled by that individual. The individual also has his own medical practice (no common law employees). Therefore, the maximum benefit will be $22,500 in 403(b) deferral and $43,500 in PS allocation in solo401(k). Both 403(b) and solo 401(k) are integrated for purposes of 415. Do you agree? Scenario 2 - everything is the same as above but the business is NOT a medical practice. Let's say it is a medical technician type of activity. Does the answer change? Scenario 3 - the organization is NOT a non-profit hospital but rather the educational institution (University of State for example). Does the answer change? I am looking to understand the general framework when the non-profit 403(b) MUST be aggregated with the individual 401(k) and what are the exception to that exception of "separate employers" rule. I think there are some exceptions to exception and that is where it gets very muddy for me. Help and education are appreciated as always.

Totally in agreement with Paul. Here is one rule of thumb I use when hearing "iffy" questions. If somebody asking a marginable question which does not pass the smell test it is very likely they know the answer to begin with but do not like the answer....If it walks like a duck...

It really boils down to individual preferences and convenience. Just had a situation where we handle the Cash Balance plan for owner-only plan. We do everything and we submitted EZ via EFAST. The same client has their solo-401k with somebody else who prepared the 5500-EZ but does not file on behalf of their clients. The client asked us if we can file and I said yes but we will have to charge for that. I have also recommended they just print the form, sign it and snail-mail it to the appropriate address since that client is literally uncapable of doing anything electronically. The client is happy because it was simple to do and it did not cost them any extra money. I was happy since I avoided another setup in EFAST, transmission, documentation and communication with the client because the fee I can charge just not justify the effort and time spent.

this is iffy as suggested by OP. IMHO, the answer resides in the future use of the assets discovered. Will the money be used to benefit the participant (after the fees paid)? If yes, then it MIGHT be paid from the trust. Will the money revert to the Employer? If no, then it is more of a settlor function.

I confirm that the HCE definition must be consistent across all the plans sponsored by Employer. Also, the original question lumps together 2 different concepts: non-discrim (HCE definition) and ownership (key employees).

Lou, this is exactly my point. I do not believe pre-approved document can accommodate this, however I see certain advantages of having designs like that. Are there any ideas for a cheap workaround from the community?

Is it OK for a Plan to have a different hours requirements for different classes to get an annual Pay Credit in the Cash Balance Plan? For example, can I design a Plan to require 1,000 hours for Pay Credit for Direct Owners, 500 hours for non-HCEs and 800 hours for Non-Direct Owners? I think this would be OK if the requirements are more liberal for non-HCEs. If I am correct, what would be the best way to accommodate with a Prototype/VS software?

agreed with Zeller

would you, please, post what you find and/or the resolution? It is a good one.

I am not sure if the EIN changes when the entity just changes the tax election? If EIN is the same you probably do not even need to amend and you will address the different corporation box (C vs S) at next restatement.

I do not believe so.

This is exactly my point - there is nothing to correct here since the SB is not filed with 5500-EZ (assuming the actual contribution is between MIN and MAX). Therefore I am thinking the proper documentation of the process and indemnification by the client might do.

Just rambling.... 1) Reproduce and match 2020 results 2) Do 2021 val and prove that the actual contribution made is good i.e. between min and max 3) Add a robust indemnification language to your engagement agreement with respect to 2021 plan year. Communicate clearly the process, result for 2021 and not being responsible for post-factum valuation. 4) Charge for the all above 5) Proceed forward to 2022. Not sure it feels entirely comfortable but might be OK based on no harm-no fault approach?

The key is to have every entity you own to be named as a participating Employer in the 4019k) Plan via the joinder agreement.

I would try to reach out to participant first. If no avail, I would do the calculations based on the normal form under the plan and be done.

I would recommend stepping back and understand why this is a takeover situation in a first place. If it is a client who is uncapable of following directions, walk away. If it is a client who needs a lot of handholding (aka babysitting), charge the premium price. If it is a prior vendor issue, have an open candid conversation with the client to get him to understand that the takeover issues will be billed separately as OOS work. Whatever time you think you are going to pend multiply by at least 150%.

I am guessing it is shortcoming on Datair part. I have personally discovered one issue in the past that had to do with allocation of deduction for partners and Datair acknowledged that I was correct and added it to their "to-do" list. There a number of instances where the easiest solution with Datair is to overwrite or "fudge" to get the results you believe is correct. I think you can simply overwrite just the testing comp in your case.

I think this is OK. The key is not to have any pre-tax IRA to avoid the pro-rata. The devil is in details as usual.